Durham and the Triangle saw significant spikes in rental unit prices this past summer.
Despite cooling down since their peak this summer, housing costs in Durham have witnessed upward momentum since the pandemic began in 2020. This has aligned with trends in other growing cities in the Triangle area and throughout North Carolina.
As of November, rent in Raleigh and Durham are up 8% compared to last year.
Prior to March 2020, the median price for a one-bedroom apartment in Durham was $950 per month. Since then, prices have continually risen. By Aug. 2021, Durham saw a 39% price increase.
By 2022, Durham’s median rent has increased by 23.7% and Raleigh’s by 28.4%. Today, Durham’s average rental price for a studio apartment is $1,590, while Raleigh’s comes in at $1,519.
But even as prices have risen, the demand for apartments has held steady. The increasing price of homes in the Triangle may be a contributing factor.
“When home prices skyrocket, which they have been doing, many people are priced out of that market,” said Michael Walden, an economist at North Carolina State University, in an interview with ABC 11. “So obviously they have to go into the rental market.”
Home values have increased in cities across the U.S. due to the pandemic. In Durham, home values have increased by 50% since the end of 2020, partially due to an influx of new residents from rural areas.
While home prices in the Triangle have slowed down in the last four months, trending toward a “return to normal,” “rising interest rates are making the median home less affordable for a typical family,” according to Axios.
“North Carolina is facing a pretty strong urban-rural divide where our urban areas are experiencing exponential growth, which is putting a lot of pressure on our housing market,” said Lucia Constantine, a board member of the Durham Community Land Trust, a non-profit organization that maintains ownership of land tracts over generations in order to lease to low- and middle-income buyers.
Constantine noted that this trend “has contributed to rising rents and a shortage of supply for low and moderate income renters.”
Along with intra-state movement, housing demand has been affected by a post-pandemic mass migration of wealthy house hunters moving from expensive urban areas like New York and San Francisco to Durham as it becomes a center for technological innovation.
This new demographic does not resemble the Durham of the past. Those who have made the post-COVID move have median incomes $10,000 to $15,000 greater than that of the city’s previous median income, which gives them higher purchasing power.
Another factor in the spike could be the increased presence of property-amassing firms buying out North Carolina cities and driving up home prices. As of May 2022, less than two dozen companies owned 40,000 single-family properties in North Carolina.
“You have the developers that specialize in multifamily properties,” said John Quinterno, visiting professor of the practice at the Sanford School of Public Policy. “They come in, and they want to build sort of a conventional looking five story apartment building. They often will buy and sell among each other.”
Another reason for the price hike could be the increasing uniformity of rental prices across North Carolina. While landlords had previously been responsible for the individual prices of units, new software now lets landlords set prices for apartments across the U.S. based on algorithms. This software allows rental property owners to automatically increase prices as other competitors increase theirs.
“You might look like you have competition [among landlords],” said Quinterno. “You really don't, because everybody is pricing the same way, because they're all in partnership.”
One software company that uses computer programs to set their prices is RealPage, a property management software that “helps owners, operators, property managers and investors unlock value faster and achieve peak performance,” according to its website.
One of RealPage's software platforms, Yieldstar, allows landlords to set prices for properties across the U.S. and outperform the market. The algorithm creates automatic price increases according to the market and allows the landlord to either accept or reject the increase.
The future of housing in North Carolina
In nearby Wake County, the past year has seen a positive correlation between the rental price increases and the homelessness rate — more than a quarter of households spend more than a third of their income on housing.
“I think there definitely is a need for policies to try to de-commodify housing and move it outside of just being a pure speculative financial product,” Quinterno said. “To that end, there's probably a need to, in an ideal world, regulate prices through the use of rent controls.”
Rent control might be easier said than done — Quinterno added that cities in North Carolina are restricted when it comes to policy due to the ideological makeup of the North Carolina General Assembly.
“They're not able to engage in policies like rent control, even if they wanted to,” Quinterno said. “The state legislature has blocked that.”
Though Durham has sought to provide more affordable housing through policies, including bond referendums and zoning allowances, developers have found loopholes, which in turn raise rents, according to Quinterno.
Another possible solution could be to mirror some of the initiatives that have proven successful in Charlotte, where a group of private investors has come together to buy up some of the naturally occurring affordable housing and make that more affordable long term.
“I think across the country, we treat housing as a commodity, rather than a guaranteed public good,” Constantine said. “And I think until we shift how we think about housing and make access to stable shelter, we will continue to experience uneven access.”
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Audrey Patterson is a Trinity sophomore and local and national news editor of The Chronicle's 119th volume.